If you own a business or are involved in running a business, chances are good that you will need to defend against a lawsuit someday. But receiving the summons and complaint still comes as a shock to many, especially when it happens for the first time. Rightly so; a lawsuit is an uncomfortable thing. However, a business has many actions it can take when it discovers it has been sued. With the right guidance and a good strategy, a business can often minimize the damage from a lawsuit. This post contains some helpful tips for decision-makers at businesses who are being sued.
1. Contact an Attorney.
This may seem obvious, but this is sometimes not the first step that is taken by business owners. An attorney will help evaluate the claims against your business and help develop a defense strategy. Contacting an attorney should be done immediately. Courts have strict time limits for responding to a lawsuit, and missing the deadline to answer a complaint may lead to a default judgment.
2. Evaluate the Case.
This should be done with the help of an attorney. Narrow your focus to specific questions. Who is being sued? Is it just the business, or is it the directors and owners as well? Who is suing you? Is it a former employee, a rival company, or a dissatisfied customer? What are the precise causes of action? Is it a contract claim, or is there a tort claim such as negligence? Once you have identified the specific items at issue in the case, you can then focus on a plan of defense.
3. Gather Information.
This is where it is helpful to keep complete and accurate records at your business. Search for all documents and other evidence relevant to your case. This can include items such as client invoices, performance reviews, emails, letters, bank statements, or employee complaints. Even items that may not seem relevant can sometimes help your attorney formulate a vigorous defense strategy.
4. Prepare a Plan.
This is a point where some business owners struggle. Some are tempted to settle immediately, and end up paying for a case that has no merit. Others are tempted to dig in and fight to the very end on a losing case, thus compounding the cost to their business. Your attorney is an invaluable resource here, as he or she should be able to give you a good idea of the strength of the claims against you.
As for your defense strategy, your attorney will help you answer questions about things such as whether or not to bring counterclaims, what types of information to seek in discovery, whether any other parties may be responsible to your business for damages, or whether you should consider something such as a change of venue.
5. Keep an Open Mind.
The simple fact is that lawsuits are expensive. Expenses can include time, money, relationships, and sometimes public relations. Lawsuits can also be unpredictable. Many times, a piece of information or an opportunity will arise where a case can be settled and the damage can be kept to a minimum. Other times, the situation may call for a quick change in strategy. Business owners and leaders should be ready to consider these opportunities as they arise so they are not lost.
While there is obviously much more that goes into defending a business lawsuit, the tips above will help remove some of the uncertainty associated with the experience, especially for a first-time defendant. With a good attorney and an effective strategy, a business lawsuit does not have to be a critical blow to your business.
The attorneys at Dalton & Tomich, PLC have represented many businesses in lawsuits as both plaintiffs and defendants. Our attorneys have obtained many favorable results in these cases. While we sincerely hope you are never forced to defend a lawsuit, do not hesitate to contact us if the situation arises. We would be happy to discuss how we could help you.
The business and employment attorneys of Dalton & Tomich take your business just as seriously as you do. Attorneys Zana Tomich and Noel Sterett are trusted by closely held family businesses and others across Michigan and Northern Illinois as invaluable partners and counselors. We guarantee all your calls and emails will be returned within one business day so you can focus on what you do best: running your business.
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